7 Steps to Always Having Money In the Bank

When your car breaks down, do you panic about how you’ll pay for the repairs? Do your friends take weekend getaways or vacations and you marvel how they have the money for that? What if I told you there was a simple way to fix all of these problems, and despite making less than many of my friends, I save more money than almost anyone I know? I may not be a professional financial planner, but I was raised by two accountants (who also happen to be the most—well, they would say “frugal” so we’ll go with that) people I know. How can you do it? Keep reading.

Disclaimer: This is advice for people who make a living wage and have access to resources like health care and childcare, but have trouble spending wisely. This is not my way of saying those living in poverty or struggling with debt need to “work harder” or save better or must be squandering their money and exploiting the government. I do not believe those things. I do believe people in similar situations to mine who are constantly “broke” are doing it wrong.

1.Live beneath your means

Can you afford a $700 rent payment a month? Find a place for $500. Or, find a roommate. Or better yet, get both. A slightly less nice apartment or less convenient living situation is worth the extra bonus money you’ll have remaining in the bank. And, this may be obvious, don’t blow the extra $200 a month at the bar.

2. Stop living paycheck to paycheck

The way people talk about “payday” like it’s an exciting event makes me crazy. If you have a regular hourly job and get regular paychecks that are the same every month, it really shouldn’t matter what day the money comes in. You should know what you can afford before it gets there, and your bank account shouldn’t be rapidly approaching $0 before that happens. If you can’t afford something before payday, you can’t afford it after. The day of the month you buy it does not make a net difference to your balance.

3. Wait a week or two on big purchases

I generally wait months when I first think about wanting something big (>$40), but I suggest waiting at least a week. More often than not, you’ll lose interest in that item or find something you want more. This keeps me from buying almost anything. A few months ago I thought about buying a soundbar for my TV. It was only a few months away from Christmas, so I decided to wait to buy it for myself as a Christmas present. By Christmas, I had spent so much on others, I didn’t want to spend the money and it didn’t seem worth it. My TV speakers are fine. I’m not listening to anything that needs exceptional quality sound anyway. And I don’t feel like I’m depriving myself because now I have $100 to spend on something later that I see that I want that I’ll probably be even more excited about. Every time you don’t buy something, you have that money for something better, later.

4. Find cheaper (or free) ways to reward yourself

Many people reward themselves with shopping or buying new gadgets they really want. They justify the purchase saying they “deserve it.” Maybe you do deserve it, but don’t you also deserve the security of a financial safety net? You don’t work as hard as you do to live in constant fear of running out of money. Instead of rewarding yourself with a new dress, video game, or manicure, reward yourself with a pricey coffee you wouldn’t normally buy or an afternoon walk alone with no one poking at you to do something. (Or food. I don’t care what “thinspiration” boards say—food is the best reward).

5. Buy the cheapest version of any necessity

Store brands, Craigslist, Goodwill, and libraries are underutilized. Why buy something new you can buy used? Why buy something at all when you can borrow it? Think of every penny you save as more money to buy something else later.

6. When you do splurge, cut back elsewhere

If I do spend more money than usual like buying myself a soundbar, I try to cut back on other things that month, like eating out less, to try to offset the cost. On a small scale, if I buy a pricey cocktail instead of a beer, I buy less drinks that night altogether. That way, even if I do splurge, I don’t end up net spending any more than I would normally.

7. Put a set amount of money into a savings account or IRA or both

Every month you’re not saving, you’re losing money. You’re putting yourself in a worse position for when a car maintenance or health issue comes up, which it will, because that’s how life works. You’re giving yourself less time to save for retirement. You’re further straining your resources. Plus, you’re building bad habits of not saving. Put as much as you reasonably can every paycheck into savings, even if it’s only 5%. AND the more you save, the bigger egg you have for doing fun things, too, when the opportunity arises.

Don’t think about these steps as depriving yourself. Instead of telling yourself “I can’t buy that,” think of it as “I don’t have to buy that.” I feel like I buy things I really want, but I just generally get more pleasure out of saving and spending responsibly than any one purchase, so more often choose not to. It’s not about punishment or deprivation—it’s about allocating a limited resource in the best way possible for the present you and the future you.